Sean Schulte

Twitter: @sirsean

Github: github.com/sirsean

I used to have a bank account at Wells Fargo. When I opened it, they required me to also take a credit card along with it. Well, they didn't technically require me to; they said if I took a credit card account then both it and my bank account would be free, but if I didn't then the bank account by itself would cost $15/month or some ridiculous thing. I'm going to go with "required" me to take the credit card.

They came up with this really brilliant system of having the credit card and checking account rely on each other: the minimum credit card payment is automatically deducted from the checking account, and the credit card is used as overdraft protection for the checking account.

I hope you can see the nightmare scenario that is obviously possible here. Wells Fargo couldn't. I tried to explain it to them at the time, and the guy at the desk furrowed his brow, scratched his head, and said "You don't understand. It's overdraft protection! It's a good thing!"

Well, I soon stopped using Well Fargo. Mostly because I moved to Chicago and they don't have branches here. And their web interface forgot my password, so I decided they can go stuff themselves. This was six years ago. Apparently, though, I left myself in position for the nightmare scenario. And I didn't know about it until today, when Wells Fargo called me.

There had been a charge made on my credit card. Since I never used the card, I don't know what this could have been. Since it happened six years ago, not only do they not have a record of it, it's well past the 60 day window for reporting fraudulent charges. So Wells Fargo is not interested in the reason for this single small charge on my credit card: in their eyes, it was the first in a long string of consistent "activity."

Because every month, the checking account automatically made the minimum payment on the credit card. That looks like activity to Wells Fargo. But I wasn't using the checking account any more; there was no money in it. You'd think that would make the payment fail and cause Wells Fargo to call me ...

But it had overdraft protection! It's a good thing.

So after making the minimum payment, the checking account bounced, and the overdraft was triggered ... adding the value of the credit card payment to the credit card balance, plus the overdraft charge. Each month the principal grew due to interest and the overdraft penalty, so each month the minimum payment was larger, so each month the overdraft was larger.

I never knew any of this was happening. I never knew there was a charge in the first place. I tried to explain what this must be, what it so clearly is, to the Well Fargo person on the phone. I could hear her brow furrowing, the gears in her head clanking around, spinning for the first time in years, and finally stopping with a loud clang: "No, it's overdraft protection!"

I was not allowed to protest. I was not allowed to file a claim of fraudulent behavior. I was allowed to pay them $1100 or else.

What a disaster. Do banks do anything right?